The Decision-Driven

Organization
Blenko et al., 2010
• Almost 50% of all CEO’s launch a reorg within their first two years.
• Making structural change in order to improve performance.
• Less than 1/3 of reorgs produce meaningful improvements in performance.
• Most had no effect.
• Some even destroy performance.
• A SWOT analysis should be performed as part of determining the
strategy of the company, not in order to determine the structure of
the organization.
• The goals of the [decision] audit are to understand the set of decisions that
are critical to the success of the company’s strategy and to determine the
organizational level at which those decisions should be made and executed
to create the most value.
• Decision effectiveness:
• The company’s efficiency in making and executing it’s critical decisions
• Quality – whether decisions proved to be right more often than not
• Speed – whether decisions were made faster or slower than competitors
• Yield – how well decisions were translated into action
• Effort – the time, trouble, and expense required for each key decision
• Decision effectiveness and financial results correlated at at 95% confidence
level or higher for every country, industry, and company.
• The research revealed no strong statistical relationship between structure
and performance.
• Two types of critical decisions:
• Big, one-off decisions that individually have a significant impact.
• Small, routine decisions that cumulatively have a significant impact.
The Six Steps to Decision-Driven
Reorganization
1. Identify your organization’s key decisions.
2. Determine where in the organization those decisions should
happen.
3. Organize the macrostructure around sources of value.
4. Figure out what level of authority decision makers need.
5. Align other elements of the organizational system, such as
incentives, information flow, and processes, with those related to
decision making.
6. Help managers develop the skills and behaviors necessary to make
and execute decisions quickly and well.